The following data (in millions) were adapted from recent financial statements of CVS Health Corporation (CVS). Year 2 Year 1 Sales $256,776 $194,579 Operating income 12,467 10,170 Average accounts receivable 18,624 15,406 1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place. Accounts Receivable Turnover Year 2 fill in the blank 1 Year 1 fill in the blank 2 2. Compute the days' sales in receivables for Years 1 and 2. Assume there are 365 days in the year, and round to the nearest day. Number of Days' Sales in Receivables Year 2 fill in the blank 3 days Year 1 fill in the blank 4 days 3. Compute the return on sales for Years 1 and 2. Round to one decimal place. Return on Sales Year 2 fill in the blank 5 % Year 1 fill in the blank 6 % 4. Based on the results in parts 1, 2, and 3, all the following are true except: The change in accounts receivable turnover from Year 1 to Year 2 is favorable. The change in return on sales from Year 1 to Year 2 is an unfavorable change. The change in days’ sales in receivables from Year 1 to Year 2 in an unfavorable change. The change in accounts receivable turnover and days’ sales in receivables from Year 1 to Year 2 are both favorable.
The following data (in millions) were adapted from recent financial statements of CVS Health Corporation (CVS). Year 2 Year 1 Sales $256,776 $194,579 Operating income 12,467 10,170 Average accounts receivable 18,624 15,406 1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place. Accounts Receivable Turnover Year 2 fill in the blank 1 Year 1 fill in the blank 2 2. Compute the days' sales in receivables for Years 1 and 2. Assume there are 365 days in the year, and round to the nearest day. Number of Days' Sales in Receivables Year 2 fill in the blank 3 days Year 1 fill in the blank 4 days 3. Compute the return on sales for Years 1 and 2. Round to one decimal place. Return on Sales Year 2 fill in the blank 5 % Year 1 fill in the blank 6 % 4. Based on the results in parts 1, 2, and 3, all the following are true except: The change in accounts receivable turnover from Year 1 to Year 2 is favorable. The change in return on sales from Year 1 to Year 2 is an unfavorable change. The change in days’ sales in receivables from Year 1 to Year 2 in an unfavorable change. The change in accounts receivable turnover and days’ sales in receivables from Year 1 to Year 2 are both favorable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following data (in millions) were adapted from recent financial statements of CVS Health Corporation (CVS).
| Year 2 | Year 1 | |||||
| Sales | $256,776 | $194,579 | ||||
| Operating income | 12,467 | 10,170 | ||||
| Average |
18,624 | 15,406 |
1. Compute the accounts receivable turnover for Years 1 and 2. Round to one decimal place.
| Accounts Receivable Turnover | |
| Year 2 | fill in the blank 1 |
| Year 1 | fill in the blank 2 |
2. Compute the days' sales in receivables for Years 1 and 2. Assume there are 365 days in the year, and round to the nearest day.
| Number of Days' Sales in Receivables |
||
| Year 2 | fill in the blank 3 days | |
| Year 1 | fill in the blank 4 days |
3. Compute the return on sales for Years 1 and 2. Round to one decimal place.
| Return on Sales | ||
| Year 2 | fill in the blank 5 % | |
| Year 1 | fill in the blank 6 % |
4. Based on the results in parts 1, 2, and 3, all the following are true except:
- The change in accounts receivable turnover from Year 1 to Year 2 is favorable.
- The change in return on sales from Year 1 to Year 2 is an unfavorable change.
- The change in days’ sales in receivables from Year 1 to Year 2 in an unfavorable change.
- The change in accounts receivable turnover and days’ sales in receivables from Year 1 to Year 2 are both favorable.
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